Member Login
Search

LUGPA Policy Brief:
Reforming the 340B Drug Pricing Program for Equity and Transparency

July 2025

In recent months, the Department of Health and Human Services (HHS) has proposed transferring oversight of the 340B Drug Pricing Program from the Health Resources and Services Administration (HRSA) to the Centers for Medicare & Medicaid Services (CMS). While the proposal aims to enhance administrative efficiency, it may lead to modifications in how the program is implemented and overseen.

The 340B Drug Pricing Program, established in 1992, requires pharmaceutical manufacturers to provide steep discounts on outpatient drugs to eligible safety-net providers. While the program has supported hospitals and clinics serving low-income populations, its rapid expansion and lack of transparency have led to growing concerns about oversight, equity, and misuse.

LUGPA has long supported the 340B program’s core mission but advocates for reforms that ensure the program is used appropriately and equitably across all healthcare providers, including independent urology practices.

CMS has a history of employing cost-cutting strategies in the 340B program, including a 2018 attempt to reduce Medicare reimbursement for 340B drugs by nearly 30%—a policy later overturned by the Supreme Court.

340B Program Inequities Affect Independent Practices

The current 340B Drug Pricing Program structure disproportionately benefits hospitals, often excluding independent physician practices, even those that serve comparable high-need patient populations. This imbalance creates a competitive disadvantage for independent practices, enabling hospitals to expand services, acquire smaller providers, and further consolidate the healthcare landscape.

Multiple investigations and government reports have raised concerns about inconsistent use of 340B savings. While some hospitals reinvest in patient care, others allocate funds toward capital projects or operational growth, with limited transparency or accountability.

  • LUGPA supports a thoughtful, balanced reform of the 340B program to ensure it more equitably supports all providers delivering care to underserved communities. Our policy priorities include:

    Expanding Access: Broaden 340B eligibility to include independent urology practices that treat large uninsured and underinsured populations.
  • Improving Transparency: Require public reporting on how 340B savings are used to ensure funds directly support patient care and uncompensated services.
  • Strengthening Oversight: Establish robust auditing and compliance standards—regardless of whether HRSA or CMS oversees the program—to reduce abuse and ensure program integrity.
  • Preserving Upfront Discounts: Maintain the current upfront discount model rather than transitioning to a rebate-based approach that could delay care and increase administrative burden.
  1. Protecting the Safety-Net Mission: Ensure any administrative transition retains the program’s core goal of supporting care for vulnerable populations, especially in rural and underserved areas.

    LUGPA Policy Recommendations

    To promote fairness, transparency, and long-term sustainability in 340B, LUGPA recommends:

    Expand Eligibility to include independent practices serving high-need populations.
  2. Mandate Transparent Reporting on how savings are allocated, with measurable, patient-centered outcomes.
  3. Enhance Auditing and Compliance to ensure consistent oversight across all provider types.

Implement Oversight Safeguards to prevent reimbursement cuts or access barriers during any transition to CMS administration.

340B remains vital to safety-net care; its structure must evolve to reflect modern healthcare realities and ensure equitable access for all providers, including independent urology groups. LUGPA remains committed to collaborating with policymakers, regulators, and stakeholders to develop a more transparent, inclusive, and patient-centered 340B program.